10-Year Treasury Closes Above 2%

10-Year Treasury Closes Above 2%

January 30, 2013 – At first blush, this may seem like news to yawn about.

But today’s close of the 10-Year Treasury yield above 2% for the first time in nine months is important for a couple reasons.

Reason One

Dollar SignToday’s close at 2.03% means the yield is 42% better than it was at its bottom of 1.43% six months ago.

This may be bad news if you are a bond investor since rising yields mean loss of investment value but for those who are only looking for future guaranteed benefits from fixed products like structured settlements, it means you get appreciably more “bang for your buck.”

Reason Two

If you look at the longer term historical trend line, it looks like the yield bottom may finally be in our rear view mirror.  Only time will tell for sure but it’s starting to look like investors are feeling progressively bearish toward bonds.

This will only bode well for structured settlement recipients going forward.

Reason Three

Small movements are BIG movements.  Let me explain:

A 0.5% rise when yields are at 5.0% means you’re only getting about 10% more money per purchase dollar; however,

A 0.5% rise when yields are at 1.5% means you’re getting about 33% more money per purchasing dollar.

Moral:  At these levels, learn to celebrate small movements!

Fixed products like structured settlements don’t track in total lock step with Treasuries per se but the latter is often used as a general benchmark for where things are headed in our industry.  And we like what we’re seeing.

So lock in those fixed interest mortgage rates while you can, folks!  Quite possibly, the low rate opportunities may soon be gone for good.  Or at least for another generation.

Meanwhile, we’re cheering the rate improvements we’re seeing from most of our life company partners and are optimistic the best is yet to come.


Finn Financial Group